What India can and cannot tax here
On a normal private portfolio, nothing. What decides it is your stake, not the asset type.
| What you sold | Indian tax on the gain |
|---|---|
| Listed company shares, stake under 10% | Nil in India, taxable only in Belgium |
| Listed company shares, stake 10% or more | 12.5% over Rs 1.25 lakh long term, 20% short term (Sections 112A and 111A) |
| Equity or debt mutual fund units | Nil in India, taxable only in Belgium |
| Shares or units mainly backed by Indian property | Taxable in India whatever your stake |
The 10% is measured on your holding in that one company, so a diversified portfolio never gets near it. The property-rich row is the one that catches people out: a real-estate fund or an InvIT can be taxable in India even though an equity fund is not, so check what each fund actually holds before you treat the whole folio the same way.
Belgium taxes the whole portfolio instead
Belgium taxes the whole gain instead, and this is new. Until the end of 2025 Belgium charged nothing on private capital gains. From 1 January 2026 gains on financial assets, expressly including foreign ones, carry a 10 per cent tax, with the first 10,000 euro of gains in a year exempt. So the answer for a Belgian resident selling Indian securities changed at the start of this year, and older advice saying Belgium does not tax the gain is out of date.
Where India does tax, on a stake of 10 per cent or more or a property-rich company, Belgium relieves it by exemption with progression under Article 23(3)(a) rather than by credit, so the Indian tax is the only tax on that slice, though the income still lifts the rate applied to the rest of what you earn.
So the treaty does not make the gain tax-free, it moves it. There is no Indian tax left to credit, which makes the Belgian computation the one that decides what you actually pay.
The India paperwork: TDS, TRC and Form 10F
Give the fund house your Belgian Tax Residency Certificate and Form 10F, now Form 41, before you redeem, claiming the Article 13 exemption. Without them it deducts TDS under Section 195, which becomes Section 393(2) from FY 2026-27, because it has no way of knowing your stake or your residence.
Before a large redemption, go one better and get a nil or lower deduction certificate, Form 13 under Section 197, now Form 128 under Section 395. That stops the withholding at source rather than leaving you to chase it.
If tax comes out anyway, you reclaim it on an Indian return, ITR-2, with the treaty position and the evidence behind it: your stake in each company and what each fund actually holds.
A worked example: Rohit's Brussels sale
Rohit, an NRI in Brussels, redeems Indian equity mutual funds for a gain of Rs 8 lakh and sells listed Indian shares held nine months for a short-term gain of Rs 2 lakh. The shares are a small holding in a large listed company, well under 10%.
India taxes neither. The Rs 8 lakh unit gain sits in the residence-only residual clause, and the Rs 2 lakh share gain sits below the 10% line, so Article 13 leaves both taxable only in Belgium. Without the paperwork the fund house would still withhold on the Rs 8 lakh, so Rohit lodges the Belgian TRC and Form 10F first, and the whole Rs 10 lakh is reported and taxed in Belgium alone.
Change one fact and the answer changes. Had Rohit held 10% or more of that company, or had it been a company whose value sits mainly in Indian property, India would tax that share gain and Belgium would relieve it under Article 23.